Speeches

Columbia University Silfen Leadership Lecture

Muhtar Kent, Chairman and Chief Executive Officer, The Coca-Cola Company
New York
November 19, 2009

As prepared for delivery

Thank you, and good afternoon, everyone. It's a great privilege to be here with you today.

In the past couple of years, I've had the honor of speaking on a number of university campuses around the world -- from the London Business School to IMD to MIT to Wharton, Emory and many, many other campuses. I always walk away from these experiences energized and inspired by the fresh thinking and the entrepreneurial spirit I find at our world's leading business schools.

Coming to Columbia, however, is truly special. I have so many wonderful friends and colleagues who are associated with this great university, including of course my dear friend, Warren Buffett, who sends along his best wishes.

I am also proud to say that my son, Cem, is now starting his second year as an undergraduate student here at Columbia. He's here with me tonight and I promised not to embarrass him, but he's the good-looking guy over there in the back!

I do have high expectations, though, so Cem, I expect to see you up here in 30 years delivering a Silfen Leadership Lecture!

With that said, I'd like to spend some time this afternoon talking about leading in challenging times. My hope is that the world you will inherit upon completion of your MBA will have calmed down quite a bit.

Rest assured, though, that whether it's a financial crisis, or a geopolitical crisis, or an energy crisis, or an environmental crisis -- turbulence will be the new norm in the years ahead. And that's not necessarily a bad thing, either.

I believe that for every headwind we confront there's an equally powerful tailwind to be ridden. The trick is finding it.

We are living in a world of great paradox. A world of seemingly insurmountable challenges... but also one of breathtaking opportunities. Your leadership will help shape and define that world.

With that said, I would like to share some thoughts with you today about leading in challenging times -- and the leadership qualities I believe you will need to possess as you go into the workforce with an MBA in hand. Mostly, though, I'm looking forward to hearing what's on your mind, and my hope is that we can have a great conversation today as well.

There's no question that the world today is still very much in a difficult place. The global economic crisis, while easing somewhat, is still largely a question mark in terms of the timing and depth of a recovery.

What we are seeing right now is an uneven recovery.

• Faster growth in China, India, Brazil and other developing markets -- indeed China is expected to grow 8.5 percent this year.
• Slower recovery in the U.S. and Europe as we set a reset among consumers.
• Volatile situations in Russia, the Ukraine and other parts of Eastern Europe -- punctuated by periods of peaks and valleys.
• And stagnation in older societies like Japan.

That said, in my heart and in my head, I also believe that America will come out of this crisis stronger and sooner than most people anticipate. This nation's entrepreneurial energy and heritage of innovation are unrivalled, and America still has the most flexible labor laws in the world.

I'm also a firm believer that tough times like these are not an excuse to sit back and ride out the storm. Rather, this is the time to confront our current reality head-on -- with courage, with tireless determination and with great strategic dexterity.

For the past year, I've been telling our people at The Coca-Cola Company and across our bottling partner system that "we can't waste this crisis." This is exactly the time to focus on what critically matters most to our business… shed what is wasteful and unproductive... and keep communicating with our customers and stakeholders,... and investing in our brands.

History has shown us, time and again, that world-class organizations that proactively manage turbulence exit the tunnel in much better shape than when they entered.

We learned this early on at Coca-Cola through the actions of one of our great leaders -- Robert Woodruff. Mr. Woodruff took another one of the most defining, chaotic, and frightening moments of the 20 th century -- World War II -- and positioned our business for unprecedented international growth. Mr. Woodruff's vision of providing a Coke for a nickel to every U.S. soldier -- no matter where they were stationed -- led to the development of 64 bottling plants behind the front lines in Europe and throughout Asia. What started as "a Coke for every soldier" turned into a global footprint that remains to this day a critical competitive advantage for our system.

I mention this example to make a broader point. There's no reason why we can't apply the same degree of courage, entrepreneurial spirit, and inspired thinking to navigate through the current economic troubles. This is not a time to be fearful or skeptical or pessimistic. It's a time to think about how to best come out of this positioned stronger... more responsive... more flexible... and more open to new possibilities than we were coming into this period.

For business big or small this is a time to focus on the core and the future, here are the questions we need to ask for each business:

• Is it core to our future value?
• Can we grow those businesses profitably today?
• Can they generate attractive returns?
• This is a time to prepare so we can weather the storm: simply said, reduce our break-even.
• This is a time to anticipate the future industry structure
• And finally a time to have the right priorities for expenditures.

At the end of the day, it's really about leadership. It's about looking hard into the mirror -- looking hard at our current reality -- and having the courage to confront our challenges head-on while never losing our faith in the future. It is about making the tough decisions and choices. It is about taking the necessary and needed risks. "Always remember, where there is no risk, there is no reward."

Scaling back or disengaging completely from the global economy, as some leaders from around the world have suggested, is not the answer. Unilateral actions won't accomplish much of anything in a world that is increasingly multi-polar.

Unfortunately, there is growing sentiment today to promote economic isolationism here in America and around the world. Part of this is being fueled, quite frankly, by some of the serious misteps we've seen in business in recent years. Today, we in the business community are facing a significant disconnect with the greater public.

Consider this: Recent Harris polls show that public trust in business and in CEOs is at an all-time low here in America. Equally alarming, in the past year we have seen surveys that show that less than 3 in 10 Americans and less than 3 in 10 Europeans believe that global trade and business ties are good for their nations. Even in the developing markets of Latin America and Asia -- nations that have most benefited from trade in recent years -- less than 4 in 10 people believe that globalization is a positive force at this very moment.

Clearly, we have our work cut out for us. And clearly, none of us can reverse this course alone. We need to think systemically and holistically to find solutions.

Business, government and education must come together -- and partner like we've never partnered before -- to promote the social, economic and environmental benefits of a world coming together through:

• greater trade,
• greater investment and
• greater development.

We must collectively do a better job in promoting our position and showing how international trade and investment benefit each and every person they touch.

As you know, anti-Americanism abroad has been a factor over the last 10 years. At the end of the Clinton administration, America's favorability rating oversees was in the 80s. Just last year, it had dipped into the low single digits. President Obama has done an extraordinary job in helping reverse the course here, but we still have a long-road ahead of us.

The world needs a strong Brand America more than ever before. I have a fundamental simple belief: "At least for the next 30 years or so the world will be a better place for our children to live in if Brand America is strong." And a strong Brand America needs more than just strong political leadership. It also needs strong business and civil society leadership both here and internationally.

At the end of the day, it all comes down to leadership -- our own leadership and the leadership qualities of those we are grooming to move our organizations forward in the coming years.

And in that vein, I'd like to spend the remaining few minutes talking about some of the specific leadership qualities we at The Coca-Cola Company believe will be necessary to navigate through the challenges we face today. And more importantly though the new landscape that will emerge over the next decade. I also would like to propose a couple of ideas about how we in business and education can partner closer to develop the kinds of leaders equipped for this new world.

Tomorrow's leaders are going to have to be prepared to manage in an environment where the balance of global economic power is shifting , and in many instances shifting significantly. Indeed, today we are seeing the emergence of a multi-polar world where economic, political, social and cultural influence now radiates from several nations and regions around the world.

For all of us without exception, this development is going to require shifts in our own thinking... shifts in behavior... and shifts in our own view of the world. How well future leaders understand these new realities... accept them... and prepare for them… will determine their success and the success of our world in the coming years.

Every time I come to a college campus, I am asked: "What leadership qualities are you looking for in tomorrow's rising managers?"

More than ever, we're looking for future leaders who possess a world view. We need people who can move seamlessly across borders and across cultures and who feel as comfortable working in Nanchang and Novosibirsk as they do in New York.

We look for people who want to know our business inside-out but who also spend a lot of time in the markets soaking up knowledge and experience outside the walls of The Coca-Cola Company. People who naturally like to be close to the point of impact. In our case, inside the four walls of our customers where our consumers invite our products into their lives 1.6 billion times every day.

With 20 million customer outlets around the world that we serve with the Coca-Cola system, we need people who can speak the language of traditional mom and pops as well as the large modern trade.

At the same time we need people who are flexible enough to understand the pressures and local cultural nuances associated with being a sole proprietor of a small street-corner bodega in Peru or Paraguay or Nigeria or Vietnam.

We're looking for people with diverse backgrounds and diverse points of view. We make a point to find young professionals who want to be stretched -- who relish the challenge of working outside their comfort zones, and who are not afraid to make mistakes. Entrepreneurial spirit is key to business success today more than ever before.

I meet regularly with a group of high-potential young managers from our company who are part of a global leadership development program we launched last year. We call that program Catalyst. We pick 20 to 30 high-potential managers from all over the world for special stretch assignments that benefit our business. We place them far outside their comfort zones and deep into interesting new roles.

They are put into cross-functional and cross-cultural teams and given challenging assignments. One team, for instance, was sent to a Southeast Asian nation to develop a 5-year market-entry plan. Another team was sent to Eurasia to work on a water profitability model. Another team was dispatched to Africa to work on a juice supply chain business model, while another came to Latin America to work in our marketing function.

True innovation, we have found, comes from this beautiful fusion of cultures, ideas, beliefs and experiences. That's why at our headquarters in Atlanta we have over 50 different nationalities represented at our corporate center alone. It's why we have Latin Americans assigned to top level jobs in Asia... Europeans in high level positions in North America... etcetera.

The next generation of leadership will need to be able to recognize and really harness the power of diversity. Inside our company, it's an absolute business imperative as we conduct business in over 200 countries around the world.

Another one of the most fulfilling diversity programs I am personally involved in is serving as the chair of our company's Women's Leadership Council. In this role, I work with senior women executives throughout our company to identify strategies to attract and develop more women into general management -- not only functional leadership -- positions. The keen insights women bring to our business are profound, to say the least.

Today, women account for the majority of purchase decision makers for our beverages. In fact, it's 70 percent of all grocery shoppers. As more and more women around the world gain economic power, we need to be there to ensure the right shopper insights, the right mix of products, and the right marketing and merchandising strategies.

The same message was echoed a few months ago when Anne Mulcahy of Xerox came to speak to our Women's Leadership Forum as my guest. I know Anne also spoke here at this program at Columbia last October. She was gracious enough to visit our headquarters in Atlanta and we truly place a premium on bringing in leadership insights from outside our system.

I've talked a bit about the pressures coming down on the next generation of leadership and what we expect from them. At the same time, that generation has their own expectations about what kinds of companies they want to work for and the brands they want to sell.

In the U.S., for example, a survey commissioned last year by Sun Microsystems shows that almost three quarters of workers want their employers to be environmentally responsible. The percentage is even higher in Europe.

Another survey of young global professionals in their 20s, conducted by an international survey firm, shows that the ideal employer reflects "a down-to-earth blend of idealism and pragmatism, of concern for self and others. "

Young leaders want opportunities to stretch and grow quickly... They place a huge premium on work-life balance... And they want their work to be meaningful and productive to society. Those sentiments were echoed by thousands of young professionals who participated in this survey.

I know from talking to my own children -- Cem, back me up on this! --that they have much higher expectations of what they want out of an employer than I had when I entered the workforce over 30 years ago. People want to work for companies and brands that share their values.

Today, when we recruit new talent to The Coca-Cola Company, one of the first things we share with them is information about the many projects we are involved in around the world to help build sustainable communities. They learn about a number of important initiatives, from what we're doing to reduce our water usage and carbon footprints, to recycling efforts to green coolers and lightweight packaging.

We have seen through our own experiences -- time and time again -- that our business in any market is only as healthy and sustainable as the communities we serve. There is a clear one-to-one regression in terms of healthy sustainable businesses and healthy sustainable communities. In our world today, promoting economic sustainability has never been more important.

So far this afternoon, I've laid out some thoughts on leadership attributes and sustainable leadership qualities we think will be necessary to compete and thrive in the coming years. I'd like to leave you with just a thought or two about how business and higher education can work together to groom the next generations of global business leaders.

For starters, I think we can do a better job of getting students out of the classroom and into the business world to learn. I agree with the thesis that conventional approaches to business education need to be rethought. Business can play a big role in being part of the curriculum, and this can stretch far beyond conventional internships.

I think we need to develop learning modules that actively place students in corporate environments as part of the curricula. Maybe it's time we think about embedding students for an entire semester or an entire year into a business as opposed to just a glorified summer vacation. I think these are the kinds of questions we have to raise. We need to think differently.

Finally, I think there's so much more we can do to partner in promoting sustainable business practices. Together we have a responsibility to show today's young managers that competing in a global economy takes more than gaining market share. It also requires a deep sensitivity to the consumers and communities we serve, the natural resources we consume, the people we employ, and all the stakeholders we touch who place their trust in us.

Business and education -- working together -- can play a huge role here and in doing so we'll be better positioned to hopefully win back the hearts and minds of those folks from the survey I spoke of earlier. More than shouting our beliefs from the rooftops, we need to speak louder with our actions.

And I can't think of a more honorable action than working together to help produce the next generation of enlightened, worldly, relationship-minded and effective global business managers.

Thank you so much for your time and attention this afternoon.

Thank you.